Someone Just Found A $2 Trillion Accounting Mistake In Trump’s Budget
Much has been said about just how hurtful Donald Trump’s new budget would be for the poor and middle class in America. And many Republicans in the Senate have said it is dead on arrival because of steep cuts to programs like Medicaid, food stamps, disability insurance, etc.
But now we learn that Trump’s budget isn’t just mean and hurtful, it also contains a gigantic accounting error that is very embarrassing for the administrion.
According to New York Magazine, Donald Trump’s budget assumes a $2 trillion increase in revenue through economic growth (that $2 trillion assumption isn’t supported by any mainstream economists, but that’s a story for a different time).
And that $2 trillion in revenue created by economic growth is supposed to pay for gigantic tax cuts for the wealthy. But Trump’s budget double count’s the magic $2 trillion by also using it to balance the budget.
Here is how John Chait from the New Yorker describes the accounting snafu:
Trump has promised to enact “the biggest tax cut in history.” Trump’s administration has insisted, however, that the largest tax cut in history will not reduce revenue, because it will unleash growth. That is itself a wildly fanciful assumption. But that assumption has already become a baseline of the administration’s budget math. Trump’s budget assumes the historically yuge tax cuts will not lose any revenue for this reason — the added growth it will supposedly generate will make up for all the lost revenue.
But then the budget assumes $2 trillion in higher revenue from growth in order to achieve balance after ten years. So the $2 trillion from higher growth is a double-count. It pays for the Trump cuts, and then it pays again for balancing the budget. Or, alternatively, Trump could be assuming that his tax cuts will not only pay for themselves but generate $2 trillion in higher revenue. But Trump has not claimed his tax cuts will recoup more than 100 percent of their lost revenue, so it’s simply an embarrassing mistake.
Former Treasury Secretary Larry Summers called it “a logical error of the kind that would justify failing a student in an introductory economics course.”
Donald Trump’s budget is a perfect example of what happens when you mix mean-spiritedness with greed and incompetence.
